NDP moves to end secret Klein-era scheme to offload corporate losses on the public – the opposition, predictably, screams

Posted on July 26, 2016, 1:34 am
8 mins

PHOTOS: Deputy Premier Sarah Hoffman, a photo that wasn’t taken yesterday, obviously, but has the advantage of having been taken by your blogger. Below: Wildrose electricity and renewables critic Don MacIntyre, Progressive Conservative interim Leader Ric McIver and the late PC premier Ralph Klein, author of the costly-to-Albertans scheme the NDP is asking the courts to unravel.

No one should be surprised that as its final decade approached, Alberta’s Progressive Conservative government cut a secret and illegal deal with a small group of electricity marketing companies to let them leave the province’s consumers holding the bag for billions if dollars in the event the dice ever failed to roll their way.

Indeed, no one is very surprised, as you can tell from reading between the lines of the oh-so-cautious mainstream media coverage of the NDP Government’s lawsuit, launched in the Alberta Court of Queen’s Bench yesterday, to invalidate a secretly negotiated clause in Tory-passed legislation that allowed corporations to offload business losses in the electricity market onto the public.

Macintyre“Our government believes Albertans should not be on the hook for secret backroom deals that were created between companies like Enron and the previous PC Government,” said Deputy Premier Sarah Hoffman, who is the NDP Cabinet’s point person on this issue. “We think it’s not only unfair to Albertans, it’s also unlawful.”

Anyone who was paying attention to how crony capitalism operated in oligarchical Tory Alberta may be appalled, but certainly not shocked, by the workings of this scheme. This kind of thing was standard operating procedure back when conservatives ran this place, and you can place a bet on it there’s more to come.

So while it may be unusual for a government to sue to challenge the activities of one of its own agencies, as a University of Calgary law professor interviewed by the Calgary Herald conceded yesterday, it’s “not a bad argument.”

The details are complicated – just the kind of news story that makes readers’ eyes glaze over and their attention wander. Which is what conservative governments count on when they cook up this stuff.

In a nutshell, the Tories intentionally snuck a loophole into their legislation “deregulating” electricity sales that allowed companies buying electricity from generators and reselling it in the “market” to walk away if a change in the law made their activities unprofitable. This was done in secret, naturally, passed by a discreet cabinet order.

The effect was to leave consumers carrying the risks of the system of casino capitalism desired by the government’s pals and funders. Unsurprisingly, all this happened back in 2000 when the beloved Ralph mciverrabblemug_0Klein, supposed slayer of the provincial deficit, was Conservative premier of Alberta.

What fun! If the roulette wheel spins to the right colour and number, the corporate bosses get to keep all the chips. If it lands on the wrong combination, and they lose big, no worries! They still got to keep all the chips.

The Klein Government – again, unsurprisingly – lied to us at the time and said they were transferring risk to the private sector when in fact they were transferring risk away from corporations and onto the public. Remember that every time you hear a complicated explanation for a how a so-called public-private partnership, or P3, is in your interest as a taxpayer. Same scam; different details.

The fact that Enron Corp. – the disgraced U.S. company that turned out to be a financial house of cards – lobbied for such schemes gave the NDP a memorable way to try to ensure this scandal sticks in the public’s mind for what it really is. At the end of 2001, after it was revealed its reputed profits were sustained by “institutionalized, systematic, and creatively planned accounting fraud,” New York-based Enron went into bankruptcy. The company had ceased to exist by 2007.

Like a lot of Mr. Klein’s conniving, it took a long time for the chickens to come home to roost. But after 16 years and about $10-billion in profits, now that the market for electricity has turned down as part of the general economic situation, corporations got ready to use their secret golden parachute to bail out of their no longer automatically profitable deals.

Ralph-Klein-SzmurloThe government’s lawyer said he will argue Mr. Klein’s government lacked the legal authority to make the secret deal – which Ms. Hoffman said could now cost Alberta electricity consumers $2 billion. Therefore, the government will argue, the clause is void. It is seeking a court order quashing a recent order of the Klein-era regulatory authority to let Calgary-based Enmax Corp. pass off a money-losing contract to consumers.

Corporate heads are spinning, of course. Never in their wildest nightmares did they imagine common sense and the interests of citizens would prevail in electricity sales casino!

The Opposition reaction yesterday was lame, to say the least.

Don MacIntyre, Wildrose electricity and renewables critic, tried gamely to make the case this sort of thing would scare investment away from Alberta.

“The NDP is asking the courts to turn back time,” he huffed to the CBC. Actually, you could make a case they’re trying to turn back crime, political crime anyway, and will save taxpayers billions of dollars.

Ric McIver, hapless interim leader of the PCs, the party that came up with this rotten deal, tried to put it back on the NDP, arguing laughably it’s the NDP who are trying to pin their mistake on someone else. I don’t know about you, but I missed the part when the NDP was in power in 2000.

This is almost as silly as last week’s Wildrose news release demanding that the NDP stop hurting Brad Wall’s fist with its face.

Seriously, I’m not making this up! When Premier Rachel Notley finally crisply responded to the umpteenth drive-by slagging of her government by Saskatchewan’s ill-tempered premier, the Wildrosers were immediately on her case. The headline on their press release read: “Notley needs to stop tearing down Alberta’s relationship with Saskatchewan.”

Makes you wonder just whose side they’re on, anyway? Oh, wait. We already know the answer to that one, don’t we?

This post also appears on Rabble.ca.

76 Comments to: NDP moves to end secret Klein-era scheme to offload corporate losses on the public – the opposition, predictably, screams

  1. political ranger

    July 26th, 2016

    These deals were cooked up in secret, no doubt about that.
    But to implement them requires rank and file public service employees. Not a peep of protest from these folks. One can only assume they were completely supportive of the Klien policy of corporate welfare, or thoroughly ignorant and incompetent.
    Either way, these very same employees are still employed. No public service then and no reason to think there is any now.

    Reply
    • Bob Raynard

      July 26th, 2016

      I think you also need to add ‘afraid’ to your list, Political Ranger.

      Reply
      • Maryinga

        July 26th, 2016

        Absolutely. The amount of silencing that has been part of the Alberta apolitical lifestyle, is only starting to come out. My husband and I have noticed how many more people are speaking their minds, telling their stories, since regime change, but if you pay attention to the Wild
        Rose……..and PC style of doing opposition, you will get a whiff of how bullying and accusatory rhetoric played into the lack of real opposition to conservative schemes we all should have been incensed about

        Reply
        • Maria

          July 27th, 2016

          10 years ago I was forced out of my provincial government job because I spoke to my superiors about the money that was wasted on travel (3 individual cars each collecting mileage as opposed to travelling in 1 car), lunches with potential clients about work that rarely materialized, and the pressure that was put on employees to perform so that the boss could get his management bonus. Luckily I was able to retire so I could leave the stress and bitterness behind. I am so very glad that the new government is cleaning house. There are many great employees in the provincial service who have kept their mouths shut for fear of reprisal.

          Reply
    • jim vickers

      July 26th, 2016

      Part of being a public servant is the oath of allegiance to the crown. If you want them to blow the whistle on their master’s misdeeds you have to have effective whistle blower. Legislation.

      Reply
      • Athabascan

        July 30th, 2016

        Yeah, except that allegiance to the crown really means allegiance to one’s country or province, but not necessarily to the political party of the day, or an immediate supervisor. There is a difference.

        In fact, I would go so far as to say that it is everyone’s patriotic duty to rat out cheaters who would piss away taxpayer money, and that includes politicians and bureaucrats.

        Reply
  2. ronmac

    July 26th, 2016

    It’s the trend these days. Corporate losses being covered by the taxpayer. We saw that in spades with the ’08 financial crash and the billions in bailout $ that followed. Socialism at the top.

    With the election of Rachel Notley we may be seeing a return to the more traditional form of “socialism” as envisioned by Tommy Douglas. We are certainly seeing that in the US with the rise of Sandernistas even though Sanders himself may no longer be “feelig the bern.”

    Reply
  3. Filostrato

    July 26th, 2016

    Heads? I win! Tails? You lose! What’s not to like?

    This forgiveness of corporate criminality seemed to start several years ago when the heads of companies stopped being designated as presidents – you know, in charge of things and responsible for outcomes – and became Chief-Whatever-Officers, just another working joe.. When the whole thing went belly-up, leaving suppliers unpaid, customers stiffed out of what they’d paid for, worker pension plans unfunded and employees thrown under the bus, the C-Whatever-O could simply deny responsibility and ride away into the sunset – but not before securing his golden (Platinum? Diamond?) parachute.

    Maybe if the C-Whatevers got paid last, once all debts and responsibilities were acknowledged and funded, we might see and end to this.

    I know, I know. I’m dreaming…

    Reply
    • Squeal

      July 26th, 2016

      You sure are, but that’s a beautiful dream.

      Reply
    • m

      July 26th, 2016

      But this is the real essence of privatization don’t you know? Anyone thick enough to believe buying a public utility, after taxpayers had built all the infrastructure, was what ‘entreprenuers’ do, perhaps deserves what they get. The amazing part is how many of these suckers still believe the market is what is going to save us all…and the NDP are the force wielding the wrecking ball. Ideology trumps ideas most of the time….and south of the border, they even have a presidential candidate named after that process.

      If you already know all the answers, why look too deeply into the details. And Rick must get that about the right wing conservative voter, if he’s trying to claim the ND put such an illegal clause into those sweetheart deals. Why check the historical record when you can make it up with impunity???

      Reply
      • St Albertan

        July 28th, 2016

        We continue to pay for the build out of infrastructure and in the case of telecommunications we receive an inferior product that degrades our potential to innovate and compete in the global services space. With energy we end up paying to build transmission capacity to allow private producers to access larger markets.
        At least we aren’t paying for pipelines except for provincial gas. Yeesh.

        Reply
  4. Gary Mitchell

    July 26th, 2016

    The NDP in their Climate change Bill 20 write into law that the Minister can make changes to the legislation without the need for approval of Parliment. Now they put this as a ‘Secret’ clause..???? Perhaps if they had done their homework before they introduced policy they could have avoided the situation. You cannot change the rules on the middle of the game. If they don’t like it they can take their ball and go play somewhere else.

    Reply
    • Keith Jenken

      July 27th, 2016

      I agree. The NDP government should have known that closing the coal fired power plants would have consequences. If they want to force their version of climate change utopia on Alberta taxpayers they should have done their homework.

      Reply
      • Jim Storrie

        July 28th, 2016

        the coal plant closures are not related to the matter at hand, which is the power purchasing agreements. I think you should take a look at this analysis of the PPA situation by Nigel Bankes from the U of C Faculty of Law.

        http://ablawg.ca/2016/03/24/the-termination-of-power-purchase-arrangements-in-alberta-what-is-the-legal-position-and-what-are-the-implications-of-termination/

        these contracts haven’t become unprofitable because of anything in Bill 20. they’re unprofitable because electricity, which was $80 per megawatt-hour in 2013, has dropped to just over $30/MWh. that has nothing to do with Bill 20, the coal plant closures, or any NDP policy that I can think of. please, do some homework of your own and read the analysis which I linked above.

        Reply
        • July 31st, 2016

          The companies want to exit because the climate change sh*t has made it ‘even more unprofitable’. We know that they loosing money before too. So stop standing up for the incompetent NDP government. NDP should reconsider their carbon tax and try to actually help Albertans in these tough economic times.

          Reply
  5. Mike Unsern

    July 26th, 2016

    Ah Klein, the gift that keeps on giving.

    I remember being angry about the “Winter Fuel Rebates” that Klein used to cover up just how badly he’d screwed us when the prices that the energy companies were charging people (predictably) sky-rocketed once he allowed them to make private profits on it.

    Instead of letting us bear the full brunt of those increases, he used our tax dollars to hide it. Taking money from the taxes that should have been used to pay for services for Albertans and handing it directly to the private corporations so that their gouging wasn’t obvious.

    And now it turns out he bent us over the table both ways to boot. Lovely.

    On the other hand. McIver does have a point when he says the NDP didn’t do their homework. Ideally, they would have started this suit *before* they enacted the carbon policies.. only once companies started exercising the clause did the NDP realize it was there.

    Reply
  6. Rod Adachi

    July 26th, 2016

    Kudos to tha NDP – hope they are successful with this court challenge. Utilities are a necessity and should not be commodified. Instead I hope they can be re-regulated. Given the profits made, returning to public delivery of utilities at cost recovery would keep many dollars in the pockets of Albertans which would more than offset the costs of the proposed carbon tax that the the Rosie-Tories are fear ingesting about.

    Reply
  7. 9 sided

    July 26th, 2016

    I suspect the insiders on this rotten deal are squirming because documents must usually by law be produced and become part of the public record if it gets to court. Lots of posturing now but I bet there is a quiet settlement offered by the players.

    Reply
    • Anon

      July 28th, 2016

      The documents have been available through the Queens Printer in Alberta for over 10 years … There was no “secret” deals. It was all done very publicly as I remember the auctions for the PPAs.

      Reply
  8. Lulymay

    July 26th, 2016

    Chief Executive Officer – CEO for short. That’s Latin for “crook” isn’t it?

    Reply
    • Dirk

      July 27th, 2016

      and “liar”

      Reply
  9. Fred

    July 26th, 2016

    Maybe now the mainstream media will begin calling the Notley gov’t the most ethical in Canada? They won’t, but they should. Albertans shouldn’t look a gift horse in the mouth… In BC we just have a horse’s ass.

    Reply
  10. Ben Kuhn

    July 26th, 2016

    This article is a bullsh*t slant on what’s a legitimate clause.

    As per the article above, the companies had the right to back out of contracts if a CHANGE IN THE LAW caused them to become less or unprofitable. Which is EXACTLY what has happened!! These contracts are being dropped because they are purchasing from coal-fired generators and Notley’s carbon tax is drastically increasing those costs. This isn’t some fat cat backing out of losing out on market trends … these are companies employing thousands who can’t absorb the additional costs that the Notley government is heaping on this province to fund their policies.

    The GOVERNMENT made changes to the LAW which made the contracts no longer feasible from a business perspective … therefor, the companies are fully within their rights to back out of those contracts, and I’m going to laugh at Notley and her stooges when the courts back the energy companies in this stupid lawsuit. However, I’ll also cry because she and the NDP are burying this province fiscally with policies that make it inhospitable to investment from companies interested in doing business.

    Reply
    • July 27th, 2016

      Indeed, the author here should acknowledge just who is “rolling the dice” here. The Alberta government encouraged industry by agreeing to let industry get out of deals where the Alberta government unilaterally changes the business viability of those deals. It’s Notley’s plan to introduce massive taxes that’s the driver here, not some act of God or world markets. Back off that and the problem goes away. Notley would rather not have consumers (directly) pay the massive climate change tax, because that’ll make it harder to sustain the lie that the tax was “revenue neutral”.

      If the government wins this case and then brags that consumers were saved $2 billion, that would truly be the height of cynicism. The truth would be that the NDP introduced $2 billion in new taxes, pinned those taxes on targets that didn’t vote (being businesses), was challenged such that voting consumers would end up paying the new taxes if the challenge was successful, and then beat back that challenge thereby avoiding clear voter transparency into the nature of the NDP tax hike.

      Reply
    • Expat Albertan

      July 27th, 2016

      But if the clauses in the Klein legislation were legitimate business, why were they negotiated in secret?

      Regardless, there is a moral principle here that, I think, supersedes your criticism: if you sell a public resource to a private concern, thus subordinating an enterprise designed for the public good to private interests, it is incumbent on the private concern to assume all the risk, regardless of any change in law. Sure, you can give them a grace period of X years to make a profit and not be subject to law changes, but to shield them from all changes in law for all time completely delegitimizes the concept of private risk for private profit. In essence, shielding them from changes in law is essentially a form of public underwriting of a private enterprise, to the benefit of the latter and to the detriment of the former. At some point, the private concern needs to respond to changes in law by adapting its business strategy rather than demanding government protection – otherwise it is not worthy of surviving in a free-market environment.

      Reply
      • Anon

        July 28th, 2016

        They were given a timeframe … End date: 2020. Also, there was nothing secretive about this. Please do more research before being so darn sure of your position.

        Reply
    • mike

      July 27th, 2016

      Ding ding, finally a rational thought on this page.

      If you are doing business with the Government, you have to protect yourself because the Government has the ability to change the rules in the middle of the contracts. Having this type of language in a contract is normal.

      Calling it an Enron clause is a pathetic attempt to demonize legitimate corporations, one of which is owned by the City of Calgary. The simple reality is that the NDP did not due basic due diligence and got caught. The NDP should be embarrassed and just admit their mistake. Taking it to court will only cost us more and extend this fiasco.

      Reply
    • Jim Storrie

      July 28th, 2016

      these contracts are unprofitable because the price of electricity has crashed to $33/MWh. the impact of SGER and carbon price, in comparison to the impact of the price of electricity dropping by nearly 60% since 2013, is miniscule.

      Reply
  11. Jimmy

    July 26th, 2016

    Corporations can no longer be allowed to govern our world… unless we democratize them , you know, make them all not for profit and change the fundamental pre-conceptions underlying our most normative ideas around ownership of resources … kinda change our culture from one of commodification of everything that is an outcropping of the imperialist mindset that thinks everything is for its use and benefit, to one where , we govern in the long term interest of humanity…that being the development of our potential in every person and we strive for our highest ideals – not one that literally is liquefying the natural world for worthless colored paper and calling it Progress

    Reply
  12. Expat Albertan

    July 26th, 2016

    Sigh…and despite all this, Ralphy-boy is lionized by a certain segment of the Alberta population as ‘just what we need these days to save Alberta’. I would laugh but I’m too busy crying.

    Reply
    • Anon

      July 28th, 2016

      If you knew WHY the arrangements were made (which was to encourage market competition as up until this only THREE companies owned and distributed power in Alberta, meaning they basically set their own prices) then you may have a better idea of WHY it was done. These PPAs were put in place to encourage more investment and diversification in Albertas power generation sector. This is a bad thing?

      Reply
      • St Albertan

        July 28th, 2016

        Klein privatized because, according to his play book, we’d be better served by selling our assets to people who would manage for effectively to our benefit. When that idea was proven wrong, he used our tax money to subsidize our cost so we would become complacent and docile. The scam worked. Here we are with our underwear pulled up and our pockets empty. He was a genius alright!

        Reply
  13. July 26th, 2016

    Here in Abbotsford, once just such a scheme was put to our historically conservative citizens in the form of a P3 water infrastructure upgrade, we voted it down by a margin of 3-1. Scams are pretty easy to spot once they escape the darkness of the back rooms.

    Reply
    • Anon

      July 28th, 2016

      This legislation was never secret. It was publicized and well known, as well as reported on, while it was happening. Anyone who accuses the conservatives of back room deals in this matter obviously have a very short memory.

      Reply
      • Athabascan

        August 1st, 2016

        Troll alert!

        Reply
  14. Darren

    July 26th, 2016

    These clauses have been there for 15 years already. They were in plain sight not a secret. Perhaps the NDP should accept responsibility for not reading them.

    Reply
  15. Ryan

    July 26th, 2016

    Hahaha one of the stupidest articles I have ever read. NDP are incompetent & unable to understand a contract. There irresponsible tax hikes & introduction of a carbon tax (Alberta PST) is the real issue.
    I believe eave the majority of albertans will see thru this NDP spin.

    Reply
    • Jim Storrie

      July 28th, 2016

      that’s pretty bold language considering that power purchasing arrangements are not even contracts.

      Reply
  16. Neil

    July 26th, 2016

    I’m not sure you understand the lawsuit. The original clause allowing termination of legislative changes made them unprofitable is not contested. Some form of guard against regulatory risk is fair, and this still leaves market risk in the hands of energy traders.

    What’s disputed is a change to ‘or more unprofitable,’ which didn’t receive consultation or legislative approval, and leaves the public holding the bag for market losses after any regulation change when the contracts are out of the money.

    Reply
    • July 27th, 2016

      Who wants to change the regulation here? I should add that I think “regulatory risk” is misleading here because the prime driver of the unprofitability here is government revenue raising as opposed to something analogous to changing building codes.

      Reply
      • Jim Storrie

        July 28th, 2016

        the prime driver of unprofitability is that the price of electricity has crashed by nearly 60% since 2013.

        the comparitively miniscule impact of the carbon levy is just the excuse that some players are using to try and dump their already-unprofitable contracts back into the Balancing Pool. what Neil said above is completely correct. (and yes, David, you should correct your article, because you missed the point!)

        Reply
  17. Sarah

    July 26th, 2016

    So she can hand blu energy government contracts after giving the hedge fund manager for blu energy a chair on the royalty review board, and she can hire a law firm from Vancouver that is also represents BC hydro, who she is trying to buy the coal replacement energy from, but the Klein era contract is corrupt?
    She is knee deep in horse crap trying to call a conflicting contract sneaky????

    Reply
    • Anon

      July 27th, 2016

      Dear Sarah, Ryan etc.

      You sure are bending over backwards to excuse the Klein mess. Doing your homework takes time and I would say the NDP getting this done so quickly is impressive.

      The only crit of the NDP I would make is they should forget about the courts and simply nationalize, without any compensation, these proceeds of slime. If we can seize without compensation the property of a parent whose kid is involved in the drug trade, we should be able to do something about this.

      Reply
      • Lynn

        July 28th, 2016

        Did you do YOUR homework in regards to this before calling it a mess? Do you know what the purpose of the PPAs was? Or are you just limiting your knowledge to the idea that the only good industry is government owned? Because we all know how well every single other nationalized industry in Canada has done through the years don’t we?

        Reply
        • St Albertan

          July 28th, 2016

          There is a huge difference between a public utility and a private enterprise. For example, would any private telecom spend a fortune to serve a group of 200 farm houses cast wide over the fringe of the boreal forest today? No. Yet all the infrastructure that our tax dollars built to connect rural Alberta was sold for pennies of its adjusted cost. Utilities are most efficient when they’re tightly regulated and hold a monopoly in their market. Pretty much the antithesis of the recently chic, laissez-faire capitalism. Roads, schools, hospitals, power, water, these have all been proven to be so capital intensive and inherently risky as to require at least government control. No private health system would build a decent hospital in half the towns in Alberta that have them. Schools? In a private system I’d suggest buying stock in the yellow school bus company. Highways? Well that one you could RF id all our vehicles and adjust the rates accordingly for the little used black top in the rural zones. Utilities? Telecomm? Fuel oil? Well even the useless Wildrose would continue the 9% purple gas rebate for farmer if they wanted to be re-elected. Alberta conservatives should rename their unified agglomeration as: the it’s only socialism if I don’t benefit party.

          Reply
        • Ken

          July 28th, 2016

          Electricity is one of those commodities that must work in a centrally planned system – which is fine if the planning is done impartially in the public interest. We can see that didn’t happen under Klein so I share your skepticism.

          The Klein mess resulted in a gold rush to produce electricity. Then the grid was overbuilt providing a guaranteed income to investors. All this came at great cost to the public and rural landowners. The PPAs are really chicken feed by comparison.

          The regulated system Alberta had with its mixture of public and private utilities worked well and we had amongst the cheapest electrical costs, all in, of anywhere in North Am.

          By trying to make a hippo into a free enterprise ballerina Klein made a mess for consumers which is costing unnecessary billions. Not to mention cementing us into an obsolete grid structure based on huge obsolete centralized generators.

          Reply
          • St Albertan

            July 28th, 2016

            Ken; you are one of the few Albertans who really understand what this province has pissed away. You know the current NDP and the thoughtful PCs have a natural coalition at this point. There are no more chances. The chickens have taken to roost.

    • Jim Storrie

      July 28th, 2016

      Sarah, there’s basically no way you’re going to find a lawyer in Alberta with the expertise necessary for this case who could work on it. all of the lawyers around here with that level of experience are already doing work for one or more of the companies or agencies involved in the matter, so taking the case would be a conflict of interest for them. that’s why they had to get someone from out-of-province.

      Reply
  18. NIC

    July 27th, 2016

    This is Notley’s fault. She did not realize the consequence of her actions and like it or not the energy companies are following the law that was enacted a decade and a half ago. It is incumbent on the NDP to learn the legal structure created by the previously elected governments. they failed in their due diligence and now want to change the laws retroactively. If you think jobs are hard to come by now in AB, just wait if this farce of a suit actually wins.

    Reply
    • Keith McClary

      July 28th, 2016

      This “legal structure” had the same foundations as Redford’s Sky Palace – secret and no parliamentary due process.

      Reply
  19. Laura Servage

    July 28th, 2016

    Dave wondering if you can respond to the comments by Ben Kuhn et al ? Morally I can’t see a situation where this whole set up doesn’t stink to high hell; some services serve the public interest and simply shouldn’t be privatized. I count utilities among these.

    However, the nature of the contract issues here is interesting. Strictly from the standpoint of contract negotiations, it makes sense that a corporation would try to protect itself from government’s ability to unilaterally change the conditions under which the contract was negotiated.

    At the end of the day though, it does still seem that the Klein PCs were willing to go with these provisions, which clearly don’t serve public interests.

    Reply
    • David Climenhaga

      July 28th, 2016

      While Mr. Kuhn’s notion that companies have some kind of God-given right to back out of contracts if a change in law or circumstance reduces their profitability is interesting, and probably worthy of comment, my general policy here is, unless there is an egregious error of fact, to let people who disagree with me speak for themselves without response. I associate the amateurish need to put down anyone who disagrees with me with some of Postmedia’s lesser publications.

      I would say that if Mr. Kuhn’s principle were widely recognized, it would make normal business relationships very difficult.Would you sign a contract to buy a car on time of there was a chance you could receive a letter that said, “So sorry, you’ll have to continue to make an extra year of payments on your car loan because the minimum wage in Kentucky just went up, affecting our profitability”? Not likely.

      I will say this: the NDP strategy of going to court to overturn bad legislation that a case can be made was drafted in a corrupt way is an unusual one. The more conventional approach, I would have thought, would have been to use the government’s majority to overturn it in the Legislature. That, of course, would have prompted court cases in which the plaintiffs claimed the new legislation was retroactive and unconstitutional, trying up the process in expensive litigation for years while the benefits of a corrupt deal continued to flow to the corporations.

      Unlike some of the folks commenting on this blog, I am not at all sure how the courts will view this approach, or what the public will make of it. I suspect it could turn out to be a big win for the government even if the courts view it with disfavour. After all, what we see right now is the opposition parties and their Outrage Machine noisily defending a group of corporations that are widely seen as ripping off the public. When Ed Stelmach was premier and trying to pass legislation that would allow him to expropriate land for an electricity transmission corridor, weren’t the same people gaining traction by screaming about a corrupt relationship between the government and the same companies?

      Reply
      • Lynn

        July 28th, 2016

        You should also know, the PPAs are not contracts, nor are they agreements. And the clauses IN the PPA are there specifically to protect against this exact thing, the clause stating they can back out of the ARRANGEMENT with no penalties. You should read it before you comment on the legality of it.

        Reply
    • Lynn

      July 28th, 2016

      The intent with the PPAs was to get more that THREE companies to produce and sell electricity in Alberta. To encourage actually competition in the market. So in essence, the idea of the PPAs was definitely in the public interest.

      Reply
      • G. Barry Stewart

        August 8th, 2016

        In BC, we have IPPs (in dependent power producers), mostly with run-of river plants on small streams and rivers. The BC Liberals specifically forbade BC Hydro from building any of these IPPs and obliged Hydro to enter into long-term contracts that guaranteed an average of 3x the market rate, plus inflation correction. IPPs now supply about 25-30% of our power, though our demand for power has flat-lined during the rise of IPPs under the BC Liberals. (Therefore: we used to make all that power in our own dams… so why do we need the IPPs?)

        BC Hydro is obliged to buy this boutique-priced power, even though they could be making it for far less in their own dams. Loaded down with overpriced, excess power, they sell it to Alberta or the USA for 1/3 the cost. In 2015 alone, BC Hydro paid the IPPs $672 million over market price.

        This definitely is NOT in the public interest in BC. ‘Not sure how it can be, in Alberta.

        Much more on this at https://in-sights.ca/?s=Ipps

        Reply
  20. Hubert

    July 28th, 2016

    What a joke this website. The clause that allows the corporation in essence says that if the government of the day changes legislation in such a way as to make a venture unprofitable, then they can can opt out of their contract. Which should be law in the first place. So all u government employees we’ll cut your wage in half and see how u like it. The biggest problem with having this kind of division with a socialist is the lack of common sense.

    Reply
    • Kang the Barbarian

      July 29th, 2016

      So if the Conservatives make a ruling a giant power line, for which no public need has been demonstrated, is to be built anyway – which is exactly what happened with the new 500 kV DC lines – and those lines make my land uneconomic for grain farming, you would be in favour of govt. paying me the annual loss? Never happened in the past and absolutely does not happen now.

      So yup, had my wages and property value both cut with no compensation for either. I don’t like what the Klein fascists (this term means government run by big business for big business) did to me and my neighbours. They empowered a foreign business to steal my land. The same spying and lying filth are still running the show in government and the NDP have not cleaned them out.

      The PPAs are a sideshow and a technical legal question. This is a public policy responsibility and the NDP are wrong to hand it off to the Courts. The NDP needs to seize the whole system and run it in the public interest.

      Reply
  21. Lynn

    July 28th, 2016

    These were not secret in any way. I remember the news reports, I remember the public auctions and the creation of the Balance Pool. I don’t know where YOU were, but apparently you weren’t paying attention. If you did your research on WHY this deal was put into place you may have a much better idea of the actual issues involved. University of Calgary Environmental Law department published an article (full of documented sources) in which you should make yourself familiar.

    Reply
  22. Farmer B

    July 28th, 2016

    First I will point out that I was against privatization of electrical generation. This outlook was somewhat self serving as I was raising hogs at the time and didn’t want to pay more for electricity. I also felt the Alberta market wasn’t big enough to be competitive.

    Today we have a government bringing a lawsuit against itself due to wording of PPAs. I think the NDP failed to do their due diligence when they wrote their new carbon tax legislation and are trying to cover up this mistake by going to court. I think the majority of Albertans are not happy with the imposition of the new carbon tax and an additional cost increase to power rates would make the new legislation that much less popular. They are trying to deflect us away from their mistake.

    In Ontario since the Liberals were first elected in 2003 the price of electricity has gone up an average of 7% every year. In Alberta at least the price of electricity went down when our economy faltered, one benefit of privatization. I am also curious if the government wins their case and it costs these companies 2 billion, how many will be willing to invest in new natural gas generation or windmills. Will the taxpayer then have to foot the bill for new generation? Would you be willing to sign a contract with a government that doesn’t honor past governments commitments?

    In Canada with our -30 winter weather which makes heat a necessity is it right to raises taxes on natural gas and electricity? I use approx. 150 gigajoules of natural gas per year. The new carbon tax will cost me about 150 dollars per year. If I install a new furnace at 5000 dollars to save 25% of my natural gas how many years payback is that? That is over 150 years, is that a good investment? Have a good day:-)

    Reply
  23. Val Jobson

    July 30th, 2016

    Excellent article explaining the background by Sheldon Fulton

    “The PPA buyer is attempting to claim that recent actions by the current government on climate change have triggered an ‘escape clause’, except the event they claim occurred in 2015 has it roots back to 2003 and actually became ‘law’ in 2007 with the full concurrence of the electricity marketplace.”

    http://calgaryherald.com/opinion/columnists/fulton-more-than-meets-the-eye-in-power-battle

    Reply
    • Albertan

      July 31st, 2016

      Yes, thanks for posting this great explanation of the whole thing, with numbers. It would be highly recommended to read the whole article, and good on the AB NDP here. Here are a couple more quotes from this article:
      “Alberta’s power purchasing buyers no longer want the risk they took on, despite doing so in 2007 when another carbon strategy was brought in.”
      “And, our mayor could show a little more concern for electricity consumers/voters and less for his favourite utility that is clearly complicit in this whole process.”

      Reply
  24. Sassy

    July 31st, 2016

    Ha. So, now, today, July 31, CBC News tells us the Edmonton Chamber of Commerce thinks the province should bring these partners together and mediate a solution. Sounds to me like the business community is getting worried about that little amendment that added ‘more unprofitable’ to the already overly generous ‘unprofitable’ wording in the PPA so-called ‘arrangement’. Lawyer Joe Arvay is an amazing choice to defend Alberta citizens. Way to go NDP. Don’t back down. The more details that comes out in this confrontation, the more shady the former government and large power companies will look.

    Reply
  25. Mr. Smith

    August 1st, 2016

    What the author here fails to mention is he opposition also includes; Mayor Nenshi who said:

    “This suit is outrageous,” Nenshi told reporters Monday evening. “We have this spectacle of the provincial government suing itself because apparently it didn’t know its own policies that have been in place for 15 or 16 years, and that Enmax has been abiding by.”

    It also included Greg Clark of the Alberta party and the Calgary Chamber of Commerce.

    Other things missing is the ‘Calgary based Enmax Corp’ is owned by that big bad corporation known as …. The City of Calgary.

    Or, no matter how the deal was cut, the NDP should have known about the very agreements (that have been in place for 15 year) their policies were effecting so they could mitigate the risk.

    Reply
    • David Climenhaga

      August 1st, 2016

      One of the flaws with the WordPress design that I use on this blog is that it doesn’t give the precise date a piece was published, rather an estimate. I wrote the piece in question on the evening of the July 25 and the story appeared on the 26th. Mayor Nenshi’s commentary also appears to have been made on the 25th and was certainly published by Postmedia on the 26th. In other words, it wasn’t in the news yet when this piece was written and published. So please don’t excoriate me for not talking to every potential critic in the province, including those who haven’t said anything yet. If, by chance, Mayor Nenshi spoke earlier to someone else, well, I missed it. This is my hobby, not my job.

      Reply
      • Mr. smith

        August 1st, 2016

        Fair Point

        Reply
      • Mr. Smith

        August 1st, 2016

        And thanks for the clarification

        Reply
  26. Sassy

    August 1st, 2016

    I wonder if the NDP government will finally clean house, at least in the energy department.

    On page 12 of of the PDF court document (see link at right hand side of http://www.alberta.ca/release.cfm?xID=4316864214ED5-FFCE-5473-9008E01946E8D82A), the current government explains why it did not know of the amendment, which added the phrase, ‘or more unprofitable’ to the word, ‘unprofitable’, already signed off and agreed to during several years of PPA consultations.

    According to the court application, the amendment, at the behest of Enron (one of the bidders), was added the day before the auction of the PPAs. Participants at the public hearings were never notified. The change was posted on a government website two days after the auction started and removed from the site two months later. A few weeks following, in an unusual move, the regulation was formally exempted from publication (through the Lieutenant Governor in Council).

    In the court document, the NDP government claims, from the time they formed government until March of this year, they were not aware of the amendment. Excerpt from PDF: ‘The existence of the August 2000 Letter was not communicated to the ministers, by officials of the Government of Alberta or otherwise, until senior government officials first learned of its existence in a mid-March 2016 meeting with the Chief Executive Officer of the Balancing Pool.’

    The civil service bureaucrats had a public duty to inform the NDP ministers of this extremely important item when ENMAX took action to get out of its PPA obligations back in December, but they remained silent. Things that make you go hmmmm…

    Reply
    • Keith McClary

      August 2nd, 2016

      It’s worth reading. It also goes into how the change was inserted in a list of minor typo corrections and technical clarifications.

      Reply
  27. David

    August 6th, 2016

    Perhaps the government is confident going to court will work, but I am not too optimistic that judges will set aside the contract terms, even if they seem unfair to customers and were implemented by the previous government in a very sneaky way.

    However, there is a better and perhaps a simpler, much more elegant way to handle this mess. Rather than trying to fix what happened in the past which is quite difficult, the government easily has the power to deal with the future. For instance, it could put a law in place to prohibit any power companies that terminate contacts early from selling them now or in the future. It would give those companies a clear choice – honour your existing contracts or go out of business. This might make make some of them think more carefully about how they treat their existing consumers.

    Reply
    • David Climenhaga

      August 7th, 2016

      Call me naive, but seem to have more faith in the Canadian judiciary than most. If there is a case to be made here – and I agree with the critics that this is an unorthodox approach – it will likely be judged on the facts and the law. We should be thankful that the Harper Regime was removed from power, because declawing the judiciary was clearly on their not-so-hidden agenda. I think there needs to be some explanation by the government as to why this approach makes more sense than simply using their majority to change the legislation; I suppose it is to impose some retroactivity on a deal the government believes was cooked up illegally. That said, I don’t think the chances of this succeeding are as bleak as its many, and nearly hysterical, critics are claiming.

      Reply
      • Sassy

        August 7th, 2016

        Perhaps there is another reason the government is allowing this to go to court. If they lose, they can still change the legislation. If they win, this ruling will have huge implications, It means governments cannot easily sneak in legislation that so obviously favours corporations and hurts its citizens. I read in a CBC comment that this court application will be heard in November, so, fortunately, we shouldn’t have to wait years for the ruling.

        I don’t know if you noticed, but opinion pieces and comments at various news sites and papers show a concerted attack blaming the NDP’s carbon tax. The NDP attackers always neglect to mention the original negotiated ‘arrangement’ already had an out. If the companies became unprofitable (assume this means expenses become greater than revenue), as a result of new government legislation, they could return the contract to the the balancing pool/government/consumers. The added clause, ‘or more unprofitable’ (assume this is the same as ‘or less profitable’) means if they lose even a little money, they can bail.

        Another point: It seems only two power companies are ever mentioned in the opinion pieces and comments, when in fact all the big power companies are trying to use this loophole to get out of their coal PPAs. People seem to forget that when the two power companies, Capital Power Corporation, partially owned by EPCOR, and ENMAX, were once Edmonton and Calgary city departments, salaries were modest. The CEOs and other management from the arms-length subsidiaries now take out millions in salaries from business revenues. The arms-length entities were created in the deregulation period in time for the PPA sales.

        Reply
  28. Sassy

    August 7th, 2016

    At last, today, Calgary lawyer and blogger, Susan Wright, gives her informed view on this issue: https://susanonthesoapbox.com/2016/08/07/the-ndps-power-play-myths-and-facts/

    ‘Alberta’s NDP government wants to save Albertans $2 billion and the Wildrose, the Progressive Conservatives and the media are churning up a dust storm of misinformation trying to stop them.

    Let’s take it from the top, shall we? …….’

    Reply
    • David

      August 8th, 2016

      This was interesting and helpful. It is ironic that what has recently become a big issue about the deregulation of power seems to hinge on the validity of a regulation. This seems to be more about the regulation itself and whether it was properly enacted, rather than the contract terms between the power seller and purchaser. I understand the power sellers were allowed to make contracts based on the regulation, so presumably if the regulation wasn’t properly enacted then the contracts (or parts of them) aren’t legal. I could see a judge having a problem with a regulation being secretly changed, so perhaps there is some hope here.

      I can understand the PC’s have to try to justify what they did, but I don’t think the Wildrose will win any votes by defending large corporate interests that lobbied the previous PC government which engaged in a cozy secretive process. This was exactly the sort of thing the old Wildrose under Danielle would have been up in arms about when the PC’s were the government. Perhaps the new Wildrose doesn’t mind the past cozy corporate PC relationships as much, or perhaps Wildrose itself is preparing to get cozy with the PC’s.

      Reply

Leave a Reply

  • (not be published)